Export Nations Hit the Jackpot at G20

http://www.usatoday.com/news/world/2009-04-02-g20-summit_N.htm

Boiling it all down, here’s what was accomplished at the G20:

  • The IMF gets $1.1 trillion, which basically means they get the G20’s permission to make additional loans to poor nations.  Much of that debt will be shouldered by the U.S.  China reportedly will chip in a paltry $0.04 trillion. 
  • Some additional oversight of hedge funds.
  • Some additional pressure on tax shelter nations like Switzerland to end their secrecy.  (This was Switzerland’s punishment for not joining the EU.)
  • A pledge to avoid protectionism.

That’s it.  Obama’s goal was to get other nations to spend more on domestic stimulus plans, hoping to improve the global trade imbalance by getting other nations to boost their domestic economies and rely less on exports.  He got steam-rolled.  Not a penny’s worth of stimulus.  Export nations are perfectly happy with their host-parasite relationship with the U.S.

The real purpose of the IMF money, in addition to assuaging their consciences about the plight of the biggest losers in globalization, was to further boost exports – a boon for the economies of China, Japan, Germany and South Korea – funded by another layer of debt on top of the mountain of debt that has crushed the global economy.  More help for the exporters, funded by American taxpayers. 

This was Obama’s big chance to show some backbone, chastise these nations for their over-reliance on exports, and to serve notice that America cannot and will not sustain a trade deficit any longer.  He opted instead for harmony and all-smiles photo ops.  As it says in the book of Ecclesiastes, there is a time for every purpose under heaven.  This was the time to begin addressing the conditions that have created enormous imbalances in the global economy.  Instead, President Obama allowed the G20 to focus on restoring the global host-parasite status quo.

Advertisements

3 Responses to Export Nations Hit the Jackpot at G20

  1. Clyde Bollinger says:

    Pete,
    Did you write this? I’m sorry, but I just had to poke you a bit.
    Your analysis is dead on.
    This notion that the only limit to the money supply is the availability of adequate paper and printing press capacity and in some cases they don’t even have that limitation, such as the Federal Reserve purchase. It only required a data entry yet the burden on future generations increased by 1.2 trillion dollars. These IMF and other debt assumptions probably operate the same way.
    This year, 2009, is the first time in my life that I’ve heard the quintillion dollar figure used. I realize we’re a long away from that kind of debt, but at the rate the trillion dollar figure became so commonplace, we can not ignore the possibility.
    You mention the quote from Ecclesiastes, and now it may be time for the ‘loaves and fishes’. Our other options are dwindling fast.

    • Pete Murphy says:

      I don’t have that big a problem with domestic stimulus packages, but I have a real problem with American tax dollars being used to boost European economies. Eastern Europe is Europe’s problem, not ours, yet it’s American taxpayers who will once again be fleeced to prop up economies around the world. I’m hoping that Congress won’t pass it.

      “Quintillian?” Wow, are things so bad that we skipped right over the “quadrillion” mark? Wouldn’t surprise me.

      • Pete Murphy says:

        By the way, I’m sure there’s one search engine company anxiously awaiting the day when our nation debt reaches a googol, just for the sheer advertising value.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: